The Hong Kong Monetary Authority (HKMA) has published a paper outlining the research status of its proposed retail central bank digital currency (rCBDC) and plans for further development. This is the third paper published by the HKMA in e-HKD, where the proposed CBDC is called.
The proposed rCBDC will Have A two-tier structure consisting of a wholesale interbank system and a retail user wallet system. A wholesale Hong Kong CBDC has not yet been introduced, but research on it began in 2017, four years before rCBDC planning began. rCBDC will be disintermediated. The paper states:
“While it may appear that e-HKD may not play an immediate role in the current retail payments market, we believe that potential use cases for e-HKD can emerge quickly in the rapid development and even revolution of the digital economy.”
One of the use cases being considered is “using CBDC as an entry and exit tool [decentralized finance, or] Decentralized Finance. “
Although no start date was specified in the paper, local media report Testing of rCBDC may begin in the fourth quarter of this year.
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Much of this paper is a response to previous papers, one of which was a request for comment on technical aspects of rCBDC, and the other on policy and design. Between them, the paper received 75 responses from stakeholders.
Most tech reviewers prefer privacy and cybersecurity over efficiency. There are broader opinions on performance and scalability.
Offline and cross-border payments and interoperability with existing payment systems are the main concerns expressed in the design. Interoperability with the Chinese mainland e-RMB CBDC, which is currently in the pilot phase, is of particular interest.
